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Airbus (AIR) has become the latest major manufacturer to lay bare the scale of the economic devastation wrought by the ongoing Covid-19 crisis.
Although the pandemic began to affect European economies significantly only in March, Airbus still saw its operating profit for the first quarter of 2020 drop by 49 per cent to €281m ($304m, £246m).
Even before the global health crisis, demand for jetliners was waning. As a result, the French manufacturer saw its revenue fall by 15 per cent to €10.63bn.
According to the International Air Transport Association (IATA), airlines across the globe are set to lose around $314bn in 2020, with demand for air travel struggling to recover even after the government-imposed lockdowns are lifted.
Airbus CEO Guillaume Faury warned that it could take “three to five years” for passengers to be willing to fly as before the crisis. Reacting to the latest figures, he said: “We are now in the midst of the gravest crisis the aerospace industry has ever known.”
Such comments mirror those made by the boss of Airbus’ closest competitor, Boeing. This week, David Calhoun described the crisis as “unlike anything we have ever experienced” and admitted that it could take years for air travel to return to pre-Covid levels.
On Tuesday British Airways, one of Airbus’ largest customers, announced plans to cut 12,000 jobs. The manufacturer may have to step up its cost-cutting measures yet further. Already it has reduced production by a third.
CFO Dominik Asam said that he expects to see some recovery in the third quarter of 2020, with the company returning “basically to a neutral situation where we don’t use cash anymore” in Q4.
Such hope has contributed to a rise in the company’s share price. By early-afternoon Wednesday trading, Airbus stands up 3.57 per cent at €54.77, having fallen around 60 per cent in the year thus far.
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